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Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

(6) Leases

Lease Overview

We lease certain pipelines, storage tanks, railcars, office space, land, and equipment across our refining, fertilizer and corporate operations. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements.

Balance Sheet Summary as of March 31, 2020 and December 31, 2019

The following tables summarize the right of use asset and lease liability balances for the Company’s operating and finance leases at March 31, 2020 and December 31, 2019:

(in millions)			March 31, 2020						December 31, 2019
Operating Leases:
ROU assets, net
Pipeline and storage			$	18					$	20
Railcars			11						12
Real estate and other			15						16
Lease liability
Pipelines and storage			$	20					$	22
Railcars			11						12
Real estate and other			13						14

(in millions)			March 31, 2020						December 31, 2019
Finance Leases:
ROU assets, net
Pipeline and storage			$	28					$	29
Real estate and other			23						24
Lease liability
Pipelines and storage			$	40					$	40
Real estate and other			24						25

Lease Expense Summary for the Three Months Ended March 31, 2020 and 2019

We recognize lease expense on a straight-line basis over the lease term. For the three months ended March 31, 2020 and 2019, we recognized lease expense comprised of the following components:

			Three Months Ended March 31,
(in millions)			2020						2019
Operating lease expense			$	4					$	4
Finance lease expense:
Amortization of ROU			$	2					$	2
Interest expense on lease liability			1						2

Short-term lease expense, recognized within Direct operating expenses (exclusive of depreciation and amortization as reflected below), was $2 million and $2 million for the three months ended March 31, 2020 and 2019, respectively.

Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Company’s ROU assets and liabilities:

			March 31, 2020						December 31, 2019
Weighted-average remaining lease term (years)
Operating Leases			3.5						3.7
Finance Leases			8.8						9.0
Weighted-average discount rate
Operating Leases			5.6		%				5.6		%
Finance Leases			8.9		%				8.9		%

Maturities of Lease Liabilities

The following summarizes the remaining minimum lease payments through maturity of the Company’s right-of-use assets and liabilities at March 31, 2020:

(in millions)			Operating Leases						Financing Leases
Remainder of 2020			$	12					$	8
2021			14						11
2022			11						11
2023			7						10
2024			4						10
Thereafter			—						43
Total lease payments			48						93
Less: imputed interest			(4)						(29)
Total lease liability			$	44					$	64

Leases

(6) Leases

Lease Overview

We lease certain pipelines, storage tanks, railcars, office space, land, and equipment across our refining, fertilizer and corporate operations. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements.

Balance Sheet Summary as of March 31, 2020 and December 31, 2019

The following tables summarize the right of use asset and lease liability balances for the Company’s operating and finance leases at March 31, 2020 and December 31, 2019:

(in millions)			March 31, 2020						December 31, 2019
Operating Leases:
ROU assets, net
Pipeline and storage			$	18					$	20
Railcars			11						12
Real estate and other			15						16
Lease liability
Pipelines and storage			$	20					$	22
Railcars			11						12
Real estate and other			13						14

(in millions)			March 31, 2020						December 31, 2019
Finance Leases:
ROU assets, net
Pipeline and storage			$	28					$	29
Real estate and other			23						24
Lease liability
Pipelines and storage			$	40					$	40
Real estate and other			24						25

Lease Expense Summary for the Three Months Ended March 31, 2020 and 2019

We recognize lease expense on a straight-line basis over the lease term. For the three months ended March 31, 2020 and 2019, we recognized lease expense comprised of the following components:

			Three Months Ended March 31,
(in millions)			2020						2019
Operating lease expense			$	4					$	4
Finance lease expense:
Amortization of ROU			$	2					$	2
Interest expense on lease liability			1						2

Short-term lease expense, recognized within Direct operating expenses (exclusive of depreciation and amortization as reflected below), was $2 million and $2 million for the three months ended March 31, 2020 and 2019, respectively.

Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Company’s ROU assets and liabilities:

			March 31, 2020						December 31, 2019
Weighted-average remaining lease term (years)
Operating Leases			3.5						3.7
Finance Leases			8.8						9.0
Weighted-average discount rate
Operating Leases			5.6		%				5.6		%
Finance Leases			8.9		%				8.9		%

Maturities of Lease Liabilities

The following summarizes the remaining minimum lease payments through maturity of the Company’s right-of-use assets and liabilities at March 31, 2020:

(in millions)			Operating Leases						Financing Leases
Remainder of 2020			$	12					$	8
2021			14						11
2022			11						11
2023			7						10
2024			4						10
Thereafter			—						43
Total lease payments			48						93
Less: imputed interest			(4)						(29)
Total lease liability			$	44					$	64

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- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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